Ripple touts interoperability to be the decisive winning factor for nations eyeing CBDC

Ripple stresses on interoperability to be the biggest bet for the success of CBDCs.

By · Sep 28, 2020 . 6min read

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Cryptocurrency payment giant Ripple says interoperability will be the determinant winning factor among countries racing to implement their own Central Bank Digital Currency – CBDC.

Ripple made its position known in a recent publication where it made a case for its company and how XRP can help governments achieve their intended goals for adopting CBDC.

To begin with, Ripple acknowledges the swiftness in the rate at which governments are moving in making sure they key release their own CBDC, with China leading the pack. However, Ripple says if these centrally controlled stablecoin infrastructures are built in silos, then it may prove to be their undoings. Hence, Ripple hammers on interoperability as the best bets for CBDCs.

“It will be critical to bridge the gaps between the various CBDC initiatives with existing payment systems…”

Ripple

Hence, any CBDC initiative must consider this as well as interoperability with other digital assets on a global scale. RippleNet, an open-source and interoperable protocol for faster transfer of value across networks makes things easier for CBDCs.

Adding to that, most business success depends on the ability to make low-cost, real-time global payments. And for this to happen, there’s need for neutral bridges.

Neutral bridge assets will allow for frictionless value movement between various CBDCs without requiring each one to solve the liquidity challenges inherent in cross-border transactions.

For this, Ripple’s On-Demand Liquidity allows interoperability among financial institutions by using XRP, which can also support CBDCs. It’s already a known fact that XRP is faster, less costly and scales at exorbitant speed compared to other assets.

Lastly, Ripple has and continues to work with central banks for a seamless experience between CBDCs and independent digital assets. This is to foster the Internet of Value where money moves as freely as information does today.

If Ripple becomes the choice platform for interoperability among CBDCs, it will at least be meeting some expectations.

Ripple found itself in hot waters recently with the rumours of two of its earliest investors planning a possible exit. While the reasons for their possible move isn’t clear, Ripple has failed to meet up with expectations. Perhaps some of its earliest investors hoped banks would jump on board to adopt it as their choice platform. But that hasn’t been the case. Also, with less clarity as to whether Ripple’s XRP is a security or a utility token, it is yet to clear its case with regulators.

No doubt Ripple as a digital asset payment platform has built huge infrastructures. Ripple could hit their inflexion point by convincing more government thinking of floating their CBDC by selling their interoperability narrative.

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